The East African Community Secretariat has rejected arbitration over non-payment of $778k to the contractor of the regional capital markets infrastructure project that has failed to take off in time, raising its implementation costs by $1.8 million.
This means regional investors will have to wait longer to start buying and selling shares of companies located in different EAC countries without going through different brokers.
Pakistan-based Infotech Private Ltd had been contracted to provide software linking the trading platforms of the Nairobi Securities Exchange (NSE), Uganda Securities Exchange (USE), Dar es Salaam Securities Exchange (DSE) and Rwanda Stock Exchange (RSE) to enable them to run as a single market in real time.
The EastAfrican has learnt that the Pakistan-based Infotech Private Ltd withdrew its services from the project effective November 2016 after the EAC Secretariat disputed the payment on grounds that testing of the project to sanction the working of the capital market infrastructure (CMI) project.
In its defence, Infotech argued that it was entitled to partial payment for the work it had done because the testing of the system had been delayed by vendors of the EAC partner states trading systems, who were not co-operating to provide the interface to link their systems and the CMI.
As a result Infotech demanded partial payment for the work done before it could re-commit its staff back to the CMI implementation process.
Hurdles
The project failed to take off due to lack of integration between CMI software and the trading systems of the participating member states —Uganda, Tanzania, Rwanda and Burundi.
Kenya pulled out of this project in 2015, citing irregularities in the procurement of the software.It demanded cancellation of the contract, saying that Infotech’s software was not compatible with the Nairobi Securities Exchange (NSE), a concern that was not considered by the Secretariat.
During the EAC Council of Ministers meeting in Kampala on February 20, the ministers were informed that Infotech had served EAC Secretariat with a notice of intention to commence arbitration over the non-payment of its dues after losing in the initial adjudication process last year.
